Unilever will pump an additional $1.6 billion into marketing its heavily pruned portfolio of 400 brands during the next five years. Last year, it spent $5.6 billion promoting 1,600 brands worldwide.
As previously announced, the company is undertaking a review of its brands that will leave it with three tiers of brands, for which it intends to marshal greater resources. All will be ranked No. 1 or No. 2 in their categories or markets.
Unilever last week said that the larger marketing budget will be funded partly by a broad new program to streamline operations that should generate an expected annual savings of $1.6 billion by 2004. The program includes layoffs of 25,000 workers over five years, or 10% of Unilever's global work force.
Unilever has said it will have a top tier of around 50 international "power" brands with the potential to cross both countries and product sectors, such as Calvin Klein fragrances, Dove soap and Lipton tea. Its second tier will be brands that share an international positioning but whose names may be different. The third grouping will incorporate "local jewels" with strong market positions, good margins and robust growth.
The majority of Unilever products facing the ax are in food, a segment that accounts for 1,000 of the company's current brand total. In addition, laundry products, Uni-lever's biggest and oldest business, has 380 brand names that must be reduced to six or seven "positionings" with several brands in each.
The entire brand-culling task is expected to be completed by the end of this year. Unilever's major agencies include McCann-Erickson Worldwide, Ogilvy & Mather and J. Walter Thompson Co.
The program outlined this week includes a rapid expansion of Unilever's e-business initiatives, in which it will invest $208 million this year.
It recently partnered with women's site iVillage and has alliances with America Online, Microsoft Corp., Excite@Home and teen girls' site WOWGO.
The streamlining program, to cost $5.3 billion over five years, also involves reducing overhead and reorganizing or selling under-performing businesses. U.S.-based cosmetics and fragrance business Elizabeth Arden will be restructured this year, Chairman Niall Fitzgerald said.
Copyright February 2000, Crain Communications Inc.